Battle lines are being drawn across Asia with nations deciding whether to embrace blockchain and cryptocurrencies or suppress them. China and India have made their positions clear with a series of crackdowns on the industry while South Korea is finally taking a more positive outlook and may even allow initial coin offerings once again. Thailand, once seen as a hub of tech investment, is poised to douse the flames of growth for this embryonic industry.
Crippling Crypto Crackdown Impending
Thailand is currently in the grips of a military dictatorship that has little desire to relinquish power. Four years after seizing control the junta still rules with an iron fist and this latest clampdown seems to be fueled by ignorance of technology rather than other motives. On Monday this week the Royal Gazette initiated a new law to ban initial coin offerings, define digital assets, determine administration fees for token trading and, most perturbing, introduce heavy taxation on gains from crypto trading.
Industry leaders and innovators are deeply concerned that this latest clampdown will hamper start-ups and technological advancement within the Kingdom. According to local media the law has threatened lengthy jail terms for entities offering crypto trading that do not register with the SEC within 90 days.
Duenden Nikomborirak, of the Thailand Development Research Institute (TDRI), said the new tax measures were “not favorable for the Thai digital economy and tech start-ups.” She warned that the policy would drive Thai entrepreneurs and investors to Singapore, where there are no taxes on ICOs or trading. Managing director of CLSA Securities (Thailand), Prinn Panitchpakdi, added that the Finance Ministry’s tax measures would likely kill the Thai ICO market even before it had a chance to become established.
Thai blockchain and fintech startups are already getting hammered with three lots of taxes; 15% capital gains tax, 7% VAT, and a further 20% corporate income tax. This makes it virtually impossible to launch a new blockchain or crytpocurrency project within the country.
Govt U-Turn on Personal VAT
Capital gains taxes of 15% will soon be extended to the public that want to trade cryptocurrencies. The country’s largest exchange, BX Thailand, said that according to the decree, customers need to collect and allocate their income and capital gain tax and send this to the Revenue Department, the VAT will be collected on trades whether they gain or lose.
The latest news announced today is that the Revenue Department will waive the 7% VAT for people trading in cryptocurrencies on exchange markets approved by the Securities and Exchange Commission (SEC). However individuals will still have to pay a 15% capital gains tax, also known as a withholding tax, on income earned in a transaction. This is still likely to drive many away to an emerging number of tax free, low commission exchanges in other Asian nations.